I can only speculate, but within the last few years it's become vogue to hate on Elon Musk and his companies, despite the incredible amount of good Tesla has been doing for humanity and the planet.
Each time they do something it costs a ton - they have 800 complaints pending for their latest efforts to get through.
The Berlin Brandenburg Airport took 25+ years to get build, 14+ YEARS of construction. So germaney often does take it's time. Project costs went from $2.xB to something like $10B plus.
Telsa is a private company, so probably can't afford overruns in time / cost of this nature (ie, 10 years later to open the factory, $8B over budget etc. Germany also seems eager to maybe balance some of the things that make everything go slow with getting something done.
> So germaney often does take it's time. Project costs went from $2.xB to something like $10B plus.
Using this airport as an example of “it takes time in Germany” is a mistake. This airport is an example of German system may fail and is a laughable case for everyone in Germany: https://en.m.wikipedia.org/wiki/Berlin_Brandenburg_Airport, History section has all the details.
The berlin branderburg airport is one of the worst example you could use. It's not because "germany takes it's time", the project was a series of fiasco.
I guess they benefit more than just the jobs (which I am not sure are even all going to German citizens) but it does seem like poor value especially as they are hardly leaving after committing so much.
Doesn't it all depend a lot of details that are not published ?
If the 2000 jobs are Fraunhofer/Max Planck Institute battery chemistry researchers and engineers, than this is great news and will help developing a solid industrial battery base in Germany. Well done!
If the 2000 jobs are Gabelstaplerfahrer, and all the tech / research is done in the US, then yeah, the investment is mostly in the construction/services sector, which doesn't seem great.
This is oversimplified, but my guess is that Tesla doesn't want to outsource the core tech/research, so we're going to see more Gabelstaplerfahrer and less Fraunhofer/MPI.
Go look at how their manufacturing line works. They don't to do stupid work. They need to control a highly complex chemical manufacturing plant and likely battery recycling plant.
Researching is not the only work that requires more then manual labor.
Go look at Nevada, after the Gigafactory there are now a number of battery companies located there.
If it was a pure job creation program that would be pretty poor value for money, but based on the article there’s a slightly larger play here.
Notability Germany wants to build technological independence, and I imagine part of that is becoming world leaders in battery manufacturing. Even if they don’t end up with Tesla IP, the knowledge that ends up in peoples heads and eventually spreads around the German economy will be incredibly valuable.
Given the EU ban on ICE cars in the near future, and the size Germany’s car manufacturing industry, it makes perfect sense for the German government to spend potential very large sums of money to make sure the next generation of cars is built in Germany. Not just ensuring their automotive industry keeps going, but also make it harder for other economies to compete by ensuring the majority of the manufacturing expertise world wide lives in German brains.
Agreed. I think that battery production, unlike solar panel production, will be highly incentivized today be local. Batteries are very heavy in kg/€ compared to other products.
There are big advantages to keeping this somewhat local. Shipping batteries over seas or cross continent, after the raw materials have also been shopped long distances, will likely be economically inefficient.
I also wonder if batteries can be commoditised the same way solar panels have been. Battery chemistry and manufacturing processes seem to be much more complex than solar panels, additionally there seems to be significantly more trade offs to be made by car manufacturers, than solar panel installers.
I think that they will eventually become components not unlike current solar panels and inverters. I wouldn't underestimate the complexity of solar panels, there's massive continuous innovation just as there is with batteries.
Of course they do.. I sincerely hope the CDU* doesn't get that through before the election and that they also end up in the opposition and never get to "govern" again.
*The C stands for Christianity, but it might just as well stand for Corruption. Would be a lot more accurate too.
In case anyone wants a summary (in german) of the crimes and failures that happenend during the last years, I compiled a website a couple of weeks ago:
That's a cool website! I have played with the idea of building something like this. A sort of blacklist for members of parliament for obvious unpunished corruption and crimes. With rules about how to get on and off of it etc.
But the case of Andreas Scheuer let's me doubt the effectiveness of such a thing: Everybody knows about the 500 million € he wasted, but since the party is just not affected by it in polls, it does not care and nothing happens.
It would be nice to have this for all parties in power, and in machine-readable format.
To make use of it for further analysis, some meta-data and normalisation would be helpful, e.g. whether someone received media allegations about corruption versus someone was actually fined.
The result could be used by journalists to generate infographics, and to select and slice-and-dice data for better reporting.
At the moment, reporting is mostly on single incidents; only occasionally, at the end of articles, related incidents are mentioned. Systemic issues (e.g. regular political corruption in a party) require more long-term data gathering, which journalists rarely take the time for, and such a data-set could be very useful background material for it.
Those Germans are full of shit, they hate Tesla. It's just to buy some time until they can cram a shit hybrid drive into their overpriced BMW and Mercedes crap wagons.
Have you tried applying for these programs? On paper the possibilities are endless in Germany. In practice it is hard to even get social security or apartments.
Most money in Germany goes to parasites like friends of the CDU, rich large corporations like Tesla, the state TV cronies, civil servants and the interest group of the day (refugees in 2015).
Well, let me tell you from experience that everything is difficult in Germany due to insane bureaucracy. I applied for student funding twice and twice I had to pay everything back due to technicalities. I would not consider founding a startup in Germany.
> In practice it is hard to even get social security or apartments.
No, it is not hard to get social security. It is also not hard to get an apartment. It might be hard for you to get an apartment in an area that is in high demand.
You should not demand easier social security from society and then be so quick to call those exact civil servants handing it out parasites.
Sort of true (if a bit unkind) for Agentur für Arbeit, not really for KfW. KfW will also give you 900 EUR -- so part of the cost -- for installing a car charging socket in your house. Or grant you a loan intended for certain renovations. That kind of thing. They also target businesses, including startups, and even municipalities.
You seem to claim some sort of discrimination of KfW. Provide proof or stop those accusations. I find your tone in the whole debate quite upsetting. You keep complaining about hard to get social benefits as if you are natrually entitled to them. Of course things can always be improved, but after all those are paid with taxpayer money of people you call privileged and clueless here.
The Tesla Berlin car factory alone costs 4 billion euros. A large part of this sum is going to local construction companies. So in some sense, they already paid for it.
You’ve missed the point entirely, as that is precisely my point. Merely hand waving it away and saying “it was spent on local construction companies” is not a sufficient argument.
It takes a hell of a lot to justify these sorts of investments and usually the ROI doesn’t materialize for the State.
What the other person meant, I think, is that when you buy services from the companies, those companies then pay a 20% tax on profit to the state, additionally, all the salaries they pay to people also end up ta ed at 30-40%, so much of the labor cost will be returned to the state and only raw materials won't (but if they are sourced locally, the suppliers will also contribute some taxes). Don't know the exact division between labor and materials, but my armchair guess would be that 20% of the cost of factory will end up as tax paid to the state.
I think GP is prefectly well aware of what was meant, and their point still stands - you need to do a lot of careful analysis to actually claim any ROI for these kinds of government handouts, and the burden of proof is very firmly on those claiming the benefits. The history of these things is overwhelmingly that in the final tally, actual benefits fall far short of break even.
I don't feel comfortable with people just claiming that there's a positive ROI, but I feel the same about claiming "usually the ROI doesn’t materialize for the State" without anything to back it up.
>The history of these things is overwhelmingly that in the final tally, actual benefits fall far short of break even.
To expand on your point, the "ROI" for a state doesn’t have to be strictly financial. It can invest to improve employment rate, to establish itself as a production/business hub, etc.
No. All of those things can and must be translated into ROI. This is the only way to compare investments. Maybe there’s a different use of these funds that would yield greater impacts in those areas you mention.
I understand your point. But: fiscal balance is merely one of many goals a state has when it invests. There are also environmental concerns, questions of social equality and wellbeing. In other words: a state is not (only) a business. Not everything shows up on the balance sheet.
No, you don’t. I’m saying all of those things have return functions. Financial ROI is just one metric. However you define your environmental returns, you can calculate an environmental ROI and then compare that across projects.
Unfortunately the track record of government spending is pretty bad. I'd rather have that money go towards private entities with good a track record, to find solutions to things like the climate crisis and pollution.
You're right, a deeper analysis is probably required and hopefully was done. In general though, I think any investment that develops the means of production of a country is well spent. Having the capabilities and equipment is a huge long term boon I think.
Like I'm not sure what else would money be better spent on then education towards a knowledgeable workforce and the means of production to produce and service people.
Within that category, I agree there is an opportunity cost, like is battery manufacturing the right thing to invest in compared to other products or services? That's a much harder thing to predict though.
> I think any investment that develops the means of production of a country is well spent.
Hyperbole such as this is why we end up with so many bad policies. You can be pro-investment and also expect that governments focus on good investments.
Because investment theses aren’t as simple as “thing X is a good investment”.
You don’t start with the assumption it’s a good investment and try to disprove it.
You do the opposite, and with some sort of analysis. It’s not that batteries are good or bad. It’s whether this amount of capital invested in batteries with this company and this business plan at this cost of capital is a good investment.
It's not hyperbole, I've refined it down to a category of investment I'm saying should be prioritized. Now within that category I acknowledged that we should look at the opportunity cost and try to predict what would be a good investment, but that's not a science, you can only do so much analysis, eventually you need to decide and there's always a risk involved.
This is a good point and probably should not be downvoted.
Telsa may not really have a problem with financing this, and subsidies might have a better impact where financing has structural problems - charging infrastructure has exactly that problem. The economics are not clear, and it's probably going to boil down to public investment. Moreover, the money might be more effectively distributed through Europe instead of being concentrated in one or two places.
In short - let capitalism do capitalism and government do civic infrastructure.
Germany will import Polish Engineers and workers to support it - and those 'lost bodies' represent a hugely problematic issue for E. European economies.
In addition to that, general free market access to E. European industry has resulted in more money exported to foreign owners of Polish industry than Poland receives in direct transfer subsidies.
Particularly when combined with the essentially 'hard money' requirement of the currency union, which favours Germany, and you have serious problems.
It's a thorny issue.
I think this subsidy probably makes sense, but it should be on a national level, not EU level.
I don‘t know the proper solution, but building 27 ‚excellent clusters‘ for battery technology wouldn‘t make any sense.
If it was national programmes then it would probably also be nationally funded and bigger economies (like Germany/Italy) would also have bigger budgets.
The bigger economies have bigger budgets is just fine, and the investments would be proportional to size their respective automotive sectors. Sweden for example, has an outsized auto industry, but they can afford the investment.
If the EU wants to do this, they should be building the factory in Spain.
Failing that, France, Germany, Italy and possibly Sweden could each build their own, that would work an be 'fair'.
The worst option would be to use EU money to centralize it in Germany, with a large cohort of foreign workers. It exemplifies the systematic centralization of wealth and power in Germany which is literally the opposite of what the EU is supposed to be doing. Since France has been ailing, and the UK is out, the very original objective of the project is now turned upside down.
It's actually sad for HN that none of you have been able to cobble together a coherent argument.
The only actual point made (ad nauseum) was that 'Germany contributes a surplus to the EU' - which is common knowledge.
You've lost the gambit if you can't make a point and only resort to name calling, you're only making yourself look bad.
The very fact that a mutlibillion dollar EU subsidy is going to Germany, ahead of less developed economies is a hint of evidence of consolidation in Germany.
The battery subsidy makes up more than 10% of the 'transfer imbalance' paid out to Germany to the EU, so it's fairly significant.
But the greater theme of centralization of power in Germany is obviously happening, it's not even controversial.
"The country’s outsized economic clout has made Berlin Europe’s political fulcrum, " [1]
Given a weak France and absent UK, Chanceller Merkel has the 'final word' on all important issues. She appointed a unelected and unknown member of her own political party to the President of the EU Commission as a pretty good example of that.
GDP per capita in Germany, France, Italy and Spain since 1990 [2] quite clearly demonstrates how after the introduction of the Euro, beyond a small bump of financial euphoria, that the Euro has considerably favoured Germany over those countries.
Absent any control over monetary policy, Spaniards etc. are left in the lurch and there's no reason to believe they will ever get out.
They are held in a financial straight jacket.
The few billion pounds they receive in EU subsidies are worthless next to to the existential harm to their economy. They are being turned into a Poland, with much of their talent leaving -> for Germany.
"Spaniards move to Germany in record numbers last year" [3]
The EU is beginning to look like what would happen if all of the Americas i.e. USA, Canada, Mexico, Brazil, Colombia formed a 'Federal Superstate' - there would be massive consolidation of power in the US via acquisition, talent migration etc..
"Germany is Doomed to Lead Europe [4]
The mechanisms of the trend are still debatable, but that it's happening is obvious.
The EU is not the perfect example of European Unity, congratulations for figuring that out.
Most European institutions are designed by dolling out as much as they get in. That is the inherent way most of these programs work.
Had Britain been part of it, a lot of those factories would be in Britain.
> considerably favoured Germany over those countries
Because Germany has better policy and better discipline. The Euro was a project essentially pushed on the Germans, if the French were to stupid to see this outcome then its their own fault. In fact, French economics have been obsessed with fixed exchange rate regimens for 200 years no matter how many times its proven to be idiotic.
Btw, France and Spain are free to leave the EU and the Eurozone. Its was their choice to join and its their choice to leave.
I have not argued against the claim that the EU or the Eurozone is not beneficial to German. Rather that in this program support is given to a large number of companies all over Europe and is not inherently centralized on Germany beyond what is appropriate with how it is financed.
You have not provided any defense of evidence that everybody of Tesla will be foreign worker either.
You can argue all day about the Euro or the market benefitting Germany and how Spain was hit hard by the financial crisis. But EU budget wise the claims you are making are not only false, but exactly the opposite.
1) There are many countries which are 'net investors' in the EU which will have less of an opportunity to leverage this money than Germany and thus, end up funding Germany.
But that's moot: the program is paid for by EU members and yet will benefit Germany first, which is not ideal.
2) "But EU budget wise the claims you are making are not only false, but exactly the opposite. "
This makes no sense at all.
"The EU has a budget therefore you are wrong" is not an argument.
> 2) "But EU budget wise the claims you are making are not only false, but exactly the opposite. "
> This makes no sense at all.
Let me rephrase: You are saying Spain is paying for investments in Germany. Not only is Spain not paying for investments in Germany, Spain is receiving money from the EU. It gets paid more out of the EU budget than it is putting into it.
Germany on the other hand pays way more money into the EU budget than it receives.
So you are not only slightly wrong, but the absolute opposite of what you are writing is true: Germany effectively invests into Spain through the EU. It can be easily googled so I do not know why you would even write something like this.
I just added the fact that Germany is of course still profitting from the EU, which is way it pays more into programs described in the article than it receives from them. Mabye I phrased that a bit convoluted.
> 1) There are many countries which are 'net investors' in the EU which will have less of an opportunity to leverage this money than Germany and thus, end up funding Germany.
You might have a point here. The statistic I posted is from 2018, so we will see how this will play out. It could be that Germany's net payments will be smaller. We will just have to wait to see the actual numbers. The net payment surplus of Germany is way bigger than the program though, so it will not turn negative. Germany will still pay for investments into other countries and not receive money from other EU members.
A quick googling showed, that Finland (net payer), Belgium (net receiver), Poland (giant net receiver), Italy (net payer), France (net payer) and Sweden (net payer) are also receiving money out of the program.
> But that's moot: the program is paid for by EU members and yet will benefit Germany first, which is not ideal.
Again: Germany pays more into the EU budget than all other members. Since it is the biggest net-payer it receive less than it pays. What you are writing is just wrong. Just look at the numbers.
If this was some evil German plan to get money out of the EU, the most effective way for Germany would be to just pay less into the EU budget in the first place and just pay the grants out nationally instead.
Everyone is working on batteries and they are happening one way or another (and arguably they have already happened) because sales of new ICE cars will be banned starting in 2030.
So the question is what would happen without this subsidy? Probably exactly what is already happening anyway, in which case this is a great windfall for Tesla (which is not even a German or EU company) but not really "money well spent". You could also argue that this is a good play by Germany, which has other EU states help reinforce their already dominant industrial position.
Yes, Tesla would have build the plant there anyway most likely but saying 'it happens anyway' in a broader context is not clear, EU has made a strategic choice that battery are a high priority and that why they want to make it happen both faster, and broader.
I'm not a fan of subsides like this, but if you are gone subsidies something then batteries are one of the best things.
> Tesla (which is not even a German or EU company)
The exact reason the EU lets other companies apply is because they want to have international investment in the EU from companies not from the EU.
> which has other EU states help reinforce their already dominant industrial position.
Every country that is spending in this program gets some return. The countries that got granted money are all over Europe.
A well tried and tested scheme by corporations. Company establishes a presence in a country, collects subsidies (payed by taxpayer money) under the pretence to later pay it back in taxes and employment. However, once the subsidies end, they move on to the next country. Having the taxpayer footing the bill. Rinse and repeat.
This is mostly nonsense. Tesla is not spending a multiple billions more for a very complex, very expensive factory (far larger then just the battery factory), heir and train 1000s of employs, developing local supply lines only to move the whole factory.
Specially because they specifically located the factory there to serve the local market.
You are turning the exceptional case and pretending it is the usual case.
With subsidies of 63 million dollars over a 10 year range Nokia build a huge plant in Germany, employed some 3200 people, had supply chains running, etc. The factory was profitable. However, once the 10y contract was over they closed the factory and relocated to Romania. And this was in a year where Nokia posted 7.2 billion in profits..
I can also see battery manufacture (and maybe chip manufacture) may become a "strategic asset" continuously support by subsidies, much like farming is.
> The funding is based on a very good EU initiative. Any battery manufacturer can apply:
That's part of the reasons why the Italian minister for ecological transition, Cingolani, few days ago talked about rethinking the ban strategy on ICE engines, using the supercar market as an example of an European industry that would suffer from it.
Italy wants to build their own batteries, in Europe
Germany wants to build batteries in Germany, no matter who produces them
The federal elections in Germany will be held at the end of this month (Sept. 2021)
Frau Merkel will retire and Draghi could become the new strong political leader of Europe, partnering with Macron.
We'll see if things are going to be the same or EU will change the rules around subsiding non EU companies.
But it'll eventually happen after German elections, not before.
> The federal elections in Germany will be held at the end of this month (Sept. 2021) Frau Merkel will retire and Draghi could become the new strong political leader of Europe, partnering with Macron.
That is a wild thesis. Merkel's power has very little to do with her personally, but with the biggest European economy she represents.
> That's part of the reasons why the Italian minister for ecological transition, Cingolani, few days ago talked about rethinking the ban strategy on ICE engines, using the supercar market as an example of an European industry that would suffer from it.
Because Italy has lost most of the other car market and is the only country in Europe that makes real money with supercars. Literally no other country outside of Italy would have this opinion.
> Draghi could become the new strong political leader of Europe
The European Commission invests in R&D of a range of topics, including but not limited to battery technology.
The Tesla factory is controversial not just because of the funding it gets but also because of the environmental damage to the environment (and starting construction work without receiving a permit): https://www.reuters.com/article/us-tesla-gigafactory-germany...
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